Question

Highlight the relationship between average cost and marginal cost curves

Answer 1

In other words, when marginal cost is greater than the average cost, the average cost would be rising. 3. If the marginal cost first falls and then rises the marginal cost curve is U-shaped, the marginal cost will be equal to the average cost at a point where the average cost is the minimum.

 Once diminishing marginal products is reached, the marginal cost of producing each additional unit will be greater than the marginal cost of the previous unit. In other words, the marginal cost curve for most production processes will eventually slope upward, as shown here.